Retailers anticipate that the double-barrel debuts of Microsoft’s Xbox on Thursday and Nintendo’s GameCube on Sunday will generate the same pre-release frenzy seen this time last year for Sony’s PlayStation2 rollout.
Unfortunately, the parallel with PS2 extends beyond the hordes of hardcore gaming fans that are expected to camp outside stores the night before the launches. As with PS2 last year, hardware and software for the new platforms will be in short supply, limiting their contribution to retailers’ fourth quarter coffers.
Indeed, merchants are counting on this year’s surfeit of PS2 titles to assuage the disappointment of shoppers who will mostly come up short in the grab for GameCubes and Xboxes.
“We’re excited about Xbox and GameCube being out there, but we’re also excited about the additional titles that will be made available for PlayStation2,” said Doug McMillon, senior VP and general merchandise manager for Wal-Mart.
“We anticipate selling out of both new platforms very quickly, and want to have enough PlayStation2 titles to make up for some of that demand on other platforms.”
McMillon said scant supplies of the new platforms will “definitely present an in-stock problem” for Wal-Mart, and doubted that any retailer was satisfied with its allocation. “We just plan not to over-promise consumers,” he said.
Brad Anderson, vice chairman, president and chief operating officer of Best Buy, agreed that “All of us [retailers] will have too few of those products for consumers,” and conversely, too few to affect the CE chain’s bottom line.
“Nintendo and Xbox won’t be available in quantities that would make an impact for the holiday season,” he said. But even if they were, the short-term contribution to Best Buy’s earnings would be minimal. “At 10 percent of our business, video games are not huge as a standalone category for us,” Anderson explained, “although they are a very robust area of growth.”
In fact, the video game sector has been posting triple-digit comp store gains, he noted, which stand to be further fueled by the new formats and PS2 titles. But Anderson wouldn’t handicap the race when asked which platform would prevail. “We’re hoping they all work,” he said.
Best Buy spokeswoman Joy Harris added that the company has not been taking pre-orders of either Xbox or GameCube, and has no plans for early store openings the mornings of the releases.
Like Best Buy, Target Stores is supporting all gaming platforms. But unlike the big box chain, video games represent “a key, integral part of our consumer electronics business,” said Target senior buyer/video games Chris Huber. “It’s a very important category.”
To that end, the discount store is mounting what Huber described as a “pre-awareness” campaign consisting of circulars and in-store signage to herald the new platforms’ debuts, although he acknowledges running the risk of disappointing customers with out of stocks.
“There’s always the risk of that,” he said, “and this year could be as bad as the PS2 shortages were last year. We don’t take reservations, and will continue to satisfy demand as long as our supplies last. Operationally, we need to have the stores set up for people lining up outside overnight, and we need to make sure customers don’t leave unhappy.”
Adding to the video game frenzy is a dearth of hit toys this year. “Video is the hottest gift for kids this season because there’s no toy driver out there,” Huber said. “There’s no Furbie.”
Gaming enthusiasts may have the best chance of scoring a GameCube or Xbox at Kmart, whose Super Center-format stores are open 24 hours a day. While retailers have agreed to not sell the products until their official street dates, individual Kmart store managers can decide whether to put the items out at 12:01 am, where they’ll be available on a first-come, first-served basis, a company spokeswoman said.
Similarly, Ames Department Stores isn’t planning any advance sales, said chairman/CEO Joe Ettore. “GameCube and Xbox will be big sellers, but we’re going to struggle for product,” he said. “It’s an important part of our business, but if Wal-Mart can’t get enough inventory, I’m certainly not going to hang my hat on it.”
